• Friday Cat Blogging – 30 April 2010


    Today is “favorite things” day. (Actually, that’s most days around here.) On the left, Domino is stretched out in the 10 am sunny patch and looking at me suspiciously because she wants to get on with her nap. On the right, Inkblot is eating breakfast. This is, I admit, not the most flattering picture I’ve ever taken of him, but I thought everyone would enjoy the hint of tongue action. Happy weekend, humans!

  • Quote of the Day: Laura Bush


    From Laura Bush, in an interview with Ladies Home Journal:

    George loves to tell the story of how all his Midland friends would come to the Oval Office and say, “I can’t believe I’m here.” And then they looked at him. Couldn’t believe he was there either.

    I think I understand how they felt.

  • Prop Trading and the Volcker Rule


    Mike Konczal interviews Jane D’Arista, a research associate at PERI, about the Volcker Rule and its proposed ban on proprietary trading by banks, the part of their business in which they borrow money to trade on their own accounts:

    Prop trading only works if [banks] can borrow enough to substantially leverage their own capital. They have to set up a situation in which the cost of borrowing is lower than the return on the assets or derivatives in which they are investing. One example is what they are doing right now — borrowing very cheaply from the Federal Reserve and earning 200 basis points, let’s say, on buying Treasury securities.

    ….The only way prop trading is profitable is if the scale is enormous, especially in periods of low interest rates when margins are thin. Also because there is — has to be — a maturity mismatch to generate that margin. Except in rare periods when yield curves are inverted, low interest rates are available if borrowing is short-term lending and the desired higher rates on investment are available on longer-term assets. There is a liquidity risk if something happens in the market and the cost of rolling over the short-term borrowing rises….Every time there’s been a shock — Franklin National in 1975, Continental Illinois in 1984, Long Term Capital Management in 1998 — one or more big institution was not able to cover its position because its short-term funding disappeared and central bank liquidity had to be rushed to the rescue.

    ….Now people might say if we remove the prop trading desk from the firm its no less risky because it will be outside the firm, its like were not going to make it less risky, it will just move it around. What should people think in terms of taking the prop desk out of firms that have access to the fed window?

    ….What’s important about the ban on banks is that you end the channel through which the backup to the Fed creates the moral hazard that supports excessive risk. If the amount of funding banks can supply to one another and to other financial institutions is curtailed, prop trading will have to shrink because the repo market will shrink.

    That’s what section 610 of the Dodd bill would do, shrink the repo market. It would restrict loans by banks to other financial institutions, requiring that the same limit on loans to a non-financial borrower in relation to capital that has been in effect for over a hundred years also apply to financial borrowers. In the case of financial institutions, the limit would apply to credit exposures involving repos, securities purchases and sales and a very broad list of derivatives.

    ….The growth of the offshore banking market and the invention of the domestic repo market [in the 90s] dramatically raised the amount of intra-sectoral borrowing and brought the issue into focus….About the same time, the Gramm-Leach-Bliley act gave permission to banks to borrow more for both necessary and other reasons — that is, to increase the share of non-deposit liabilities on their balance sheets. So they set up this whole interconnection game in which they borrow from one another and, in the process, are creating liquidity by monetizing debt. Of course, its all on paper — its all a pyramid — and in the end it can collapse and did.

    The solution is to limit the funding that goes into prop trading as well as banning the trading itself for those institutions that have access to the Fed. And if that were done — if section 610 became law — even the investment banks wouldn’t be able to engage in excessive proprietary trading because they couldn’t get the funding to do so.

    The whole thing is a little long and wonky, but worth a read. And while you’re at it, if “off balance sheet” is a mystery to you, you might want to check out Mike’s interview with UMass lecturer Jennifer Taub as well. It’s good tutorial stuff.

  • Do Republicans Want to Win?


    Ramesh Ponnuru comments on the upcoming midterm elections:

    Do House Republicans actually want to take the majority? I have asked that of nearly every House Republican I have met since January 2007. Life in the minority is just as satisfying if you’re in it for the perks; more satisfying, actually, since you don’t have to make appropriations bills go out on time, run committee hearings, etc. Only once, a few weeks ago, have I heard anyone say that more than half of the conference wants the majority. That congressman said that his colleagues do want to be in the majority but are not yet ready to do what it would take. But he thinks they’re getting there.

    Wow. I mean, technically, sure, I guess that being in the minority is less stressful. But everything I’ve ever heard on this subject suggests that, overall, being in the minority just absolutely sucks. You get nothing. You have no ability to do anything. You’re shut out of decisionmaking completely. Your staff is minuscule. Etc. etc. The only way in which it’s better than being in the majority is if you just like having the doorman call you “congressman” and literally don’t care about the process of lawmaking at all.

    But apparently virtually no one in the GOP House caucus thinks that even a majority of their fellows wants to take control in November. I could understand a few slackers not wanting the aggravation, but a majority? Holy cow.

  • Rush: “I’m Just Noting the Timing Here”


    Me, in email with a friend last night about the Louisiana oil spill:

    I can’t wait until Rush figures out how this is all actually Obama’s fault. 

    Honest to God, I didn’t know he’d said this a few hours earlier:

    I want to get back to the timing of the blowing up, the explosion out there in the Gulf of Mexico of this oil rig….Now, lest we forget, ladies and gentlemen, the carbon tax bill, cap and trade that was scheduled to be announced on Earth Day. I remember that. And then it was postponed for a couple of days later after Earth Day, and then of course immigration has now moved in front of it. But this bill, the cap-and-trade bill, was strongly criticized by hardcore environmentalist wackos because it supposedly allowed more offshore drilling and nuclear plants, nuclear plant investment. So, since they’re sending SWAT teams down there, folks, since they’re sending SWAT teams to inspect the other rigs, what better way to head off more oil drilling, nuclear plants, than by blowing up a rig? I’m just noting the timing here.

    Plus there’s this, from the friend I was emailing with: “Maybe not Obama, but the WSJ snuck it in their story yesterday: you know, if the environmentalists didn’t make us drill so deep, so far out from shore, this wouldn’t have happened.” I haven’t seen that story, but I wouldn’t be surprised if this meme picks up steam in the days to come.

  • Reinflating the Bubble


    The LA Times reports on the homebuyer’s tax credit:

    Buyers can get a tax break of up to $8,000 for first-time purchasers and $6,500 for some current homeowners if they reach agreements by April 30 and seal their deals by June 30.

    California lawmakers sweetened the package last month by passing a $10,000 credit that kicks in Saturday. Now, some buyers in the state can qualify for as much as $18,000 in federal and state tax relief if they time their purchases just right.

    Seriously? California, which is in only slightly better fiscal shape than Greece, is handing out money to homebuyers? Jeebus. So how’s that working out?

    The dual incentives have created a mind-set reminiscent of the bubble years, particularly among first-timers, who stand to gain the most money. “I am looking at properties almost constantly, and it is just kind of a feeding frenzy right now, which frustrates me,” said Zeenath Shareef, 30, a Venice Beach renter and finance director for a Santa Monica consulting firm who took half days off to look for a home.

    “In my mind, properties are going more quickly, and in some cases for more than what they would normally sell for, because people are in such a rush to buy ahead of this deadline,” she said. “I hear people saying, friends of mine saying, ‘I have to buy, I have to buy, I have to buy.’ “

    We are a nation of idiots.

  • ID, Please


    Ezra Klein reports that the new Democratic immigration proposal includes a shiny new way to enforce employment laws:

    I don’t think the Democrats are going to like me calling this a biometric national ID card, as they go to great lengths to say that it is not a national ID card, and make it “unlawful for any person, corporation; organization local, state, or federal law enforcement officer; local or state government; or any other entity to require or even ask an individual cardholder to produce their social security card for any purpose other than electronic verification of employment eligibility and verification of identity for Social Security Administration purposes.”

    But it’s still a biometric national ID card. It’s handed out by the Social Security Administration and employers are required to check it when hiring new employees. Essentially, if you want to participate in the American economy, you need this card.

    I’ve written about this before, and it’s fine with me if they call it a national ID card. I’m in favor. It’s not as if these things are security panaceas or anything, but they’d be pretty useful for things like reducing employment fraud or voter fraud. And what are the drawbacks? Every time this comes up I hear lots of vague but alarming talk about police states and the end of liberty, but nothing concrete about how this would really change things much from the status quo ante, in which most of us have to produce IDs multiple times a day merely to get through our lives. As for making it easier for the federal government to track us, please. They already have all the tools they need to track us. It’s called a Social Security number. A non-fakable Social Security number would be an improvement, not a further infringement on our liberty.

    The main difference a national ID would make is that if the federal government provided these cards free of charge, then poor people would have a reliable form of ID too, not just rich and middle class folks. Could they be abused? Sure, but no more than our current hodgepodge of SSNs and corporate ID cards. Other countries seem to have them without descending into totalitarianism.

    Unfortunately, as Ezra says, this whole thing is a nonstarter: “The oddity of this strategy, of course, is that anti-immigration sentiments run highest among the same communities that are most opposed to national ID cards.” There’s not much chance of this proposal getting anywhere.

  • Finance Reform Update


    Andy Kroll runs down the remaining problems that Republicans still have with the Senate financial reform bill:

    Right now, there look to be three main sticking points between the parties. One is the proposed consumer protection agency….What to do with systemically risky, or “too-big-to-fail,” banks is another prickly issue….The third issue where major differences remain is regulating derivatives.

    In case you haven’t been keeping score at home, those three things are pretty much the heart of the entire bill. Everything else is window dressing. And just to drive the point home, here’s Andy describing Sen. Richard Shelby’s take on the bill:

    Today on the Senate floor, Shelby pretty much eviscerated the measure, while a red-faced and anxious-looking Chris Dodd sat across the aisle from the Alabama senator. “This bill threatens our economy,” Shelby said. He added that the bill would leave taxpayers on the hook for future bailouts; the derivatives provisions would impair the economy; a new consumer bureau would stifle consumer lending; and a proposed Office of Financial Research, which would gather financial data used to predict future financial crises, would pry into Americans’ lives and violate their civil liberties.

    But other than that, Mrs. Lincoln, how did you like the play?

    Hopefully this is just showboating, because if it’s not it means that Republicans still aren’t in a mood to get serious about financial reform. They just want to gut the entire measure. Either way, it’s pretty reckless behavior.

    (And just to address Shelby’s concerns for the record: (a) actually, it would protect taxpayers, (b) no they wouldn’t, (c) it might stifle predatory lending, but that’s all, and (d) WTF is he talking about?)

  • Roller Coaster Economics


    Ryan Avent’s baby is going to be old enough for a visit to a theme park one of these days, and he’s not looking forward to it:

    Specifically, I’m dreading the queues. Endless, winding queues, lasting hours, all to ride a roller coaster for two minutes.

    There should be an easy solution to this: ride pricing. A long line indicates an underpriced experience. At any given moment, many more people want to ride than the ride can accommodate. By charging for individual rides, demand can be rationed until the queue is winnowed down to something reasonable, like five to ten minutes. The pricing could even vary. Operators could reduce prices for underused rides until more users are attracted, the better to keep activity evenly distributed around the park.

    The problem with this is that people would hate it. But you could improve upon the system to make it less unpleasant! Specifically, you could give everyone who comes into the park a bunch of tokens, and then rides could be priced in tokens. You could then sell additional bundles of tokens for the real ride enthusiasts. I seem to recall that the old state fairs I used to visit operated on this system and didn’t have long queues.

    Ryan’s idea sounds suspiciously familiar to this Southern California native. Throughout my childhood we visited Disneyland every year on my sister’s birthday, and since Walt Disney was no communist he made sure that if you wanted to get on the more popular rides you had to pay for the privilege. This wasn’t done via tokens, however, it was done via ticket books. You could pay for admission by itself, or you could pay a few dollars more for admission plus a book with a limited number of A, B, C, D, and E tickets. A and B tickets were for the junky rides. We always came home with a bunch of unused one. E tickets were for the Matterhorn or the other good rides. If you ran out you could buy more inside the park.

    Disneyland ditched the ticket books in the early 80s and went to a simple admission charge that included unlimited access to all rides. The reasons were obvious: they made more money since everyone now paid the higher admission price, and they saved money since they didn’t have to print ticket books, hire people for ticket booths, or collect tickets at the rides.

    Which is all well and good, but the bigger question is: Did the ticket books cut down on queuing? Answer: Not as far as I can tell. The line for the Matterhorn or Space Mountain was miles long back in the 60s and 70s, just like it is today. In theory, ride pricing should work. In practice, I think theme parks might represent a market failure.

  • Next Time Will Be Different


    Via Jonathan Chait — who owes me big time for making me read this — here is Jonah Goldberg arguing that better financial regulation is a fairly non-urgent issue because bankers have all learned their lessons:

    Think of it this way. We are just as vulnerable as ever to the threat of Coca-Cola releasing another New Coke. No laws have been passed to prevent it. No new oversight authority has been created to warn of its looming threat. And yet, the odds of Coca-Cola rolling out another debacle like New Coke are severely limited. Why? Because, to paraphrase Roy Scheider in Jaws II, as God is their witness the executives at Coca-Cola don’t want to go through that Hell again.

    ….This is not to say that the financial crisis doesn’t justify any reforms. But let’s not forget that inherent to capitalism is the capacity for self-correction. Surely the disappearance of Lehman Brothers and the dismantling of AIG is an example that many can learn from. The real danger seems to me that people like Dodd haven’t learned the lesson that government is not the only—or best—corrective to the excesses of capitalism.

    Does Jonah really think that American industry’s capacity to launch stupid new products was diminished by the New Coke fiasco? Does he remember Pets.com? Or Webvan? Or, restricting ourselves just to the soft drink market, Crystal Pepsi? Or any of the other fine beverages on this list?

    As for bankers learning their lesson, I’m at a loss for words. If there’s a profession on the entire planet that has aggressively declined to learn any lessons from its periodic collapse over the past several millennia, it’s high finance. In This Time It’s Different, it takes the authors three columns of text spread over four pages just to list the banking crises since 1800. They tally up 51 of them since 1980 alone.

    God knows I’m sympathetic to arguments about regulatory capture and government collusion in blowing up financial bubbles, but even Alan Greenspan has admitted that financial markets can’t be trusted to self-regulate. Alan Effin Greenspan. Regulatory capture is a reason to try to build a more robust financial control infrastructure, one that at least tries to address the changes in modern finance, not a reason to shrug our shoulders and pretend, yet again, that next time will be different.

  • Downgrading Europe


    Greece, Portugal, and Spain all got downgraded by the ratings agencies this week. AP reports on the reaction:

    The rating agencies that sort good investments from junk are once again injecting fear into financial markets. Only this time it’s for warning investors about a possible threat — Europe’s debt crisis — rather than for failing to see one coming.

    ….European Union officials weren’t pleased by the negative ratings. ”Who is Standard & Poor’s anyway?” EU spokesman Amadeu Altafaj Tardio said Wednesday. He said the agency should better assess ”realities on the ground,” such as financial rescue talks in Athens ”that are making rapid and solid progress.”

    Color me unsympathetic. Tardio sounds like every CEO talking his book ever quoted in the Wall Street Journal. However, this does demonstrate one of the problems you’d have if you got rid of the ratings agencies and just had the SEC do the job instead. Rating the securities issued by U.S. banks is one thing, but can you imagine the United States government downgrading the sovereign debt of friendly countries? I can’t. And if they did, can you imagine the reaction? I can. Oh yes, I surely can.

    The ratings process, obviously, has big problems. But although putting ratings under the thumb of the U.S. government might solve one of those problems, it would also create a whole set of new ones. This remains a very difficult problem.

  • Grim Reality From the Pentagon


    The Pentagon released a new report on operations in Afghanistan yesterday, just a few weeks before their make-or-break offensive in Kandahar begins:

    The new report offers a grim take on the likely difficulty of establishing lasting security, especially in southern Afghanistan, where the insurgency enjoys broad support. The conclusions raise the prospect that the insurgency in the south may never be completely vanquished, but instead must be contained to prevent it from threatening the government of President Hamid Karzai.

    The report concludes that Afghan people support or are sympathetic to the insurgency in 92 of 121 districts identified by the U.S. military as key terrain for stabilizing the country. Popular support for Karzai’s government is strong in only 29 of those districts, it concludes.

    ….The report also notes that insurgents’ tactics are increasing in sophistication and the militants have also become more able to achieve broader strategic effects with successful attacks. The Taliban continue to use threats and targeted killings to intimidate the Afghan population.

    At the same time, Taliban shadow governments, which can include courts and basic social services, have strengthened, undermining the authority of the Afghan government, according to the report.

    Following the happy-talk optimism that marked most of the Bush years, Gen. Petraeus and the rest of the Pentagon have obviously decided that it’s better to manage expectations than to raise them. And managing them they are. After reading this, I’ll probably be happy if McChrystal emerges next fall and announces that he’s confident we’ll be out of Afghanistan by the time I qualify for Medicare.

  • Luntz’s Latest


    Frank Luntz, coming off his bravura performance trying to stop financial reform by labelling it a “bailout fund” regardless of what’s actually in the bill, is back for an encore. In the latest display of the rhetorical pretzel bending for which he’s famous, he explains why financial reform is a sham:

    The Democrats supporting the current legislation have assured an anxious electorate that whatever funds are used to create whatever regulatory scheme created will come from the banks, not the taxpayers. Let me emphasize that so that even casual readers will catch it: the Democrats promise that you won’t pay for their legislation, banks will.

    Really?

    Since when have corporations ever paid taxes, fees or penalties? Employees end up paying in the form of lower salaries and benefits. Customers end up paying in the form of higher costs.

    And in this case, every account holder will be forced to pay higher fees on their checking account and savings account. That’s you, my friendly reader. Can you say “checkbook tax”? I can, and I think lots of candidates will be saying it come November.

    Yeah, I think Frank can say “checkbook tax.” I also think he can write it, post it, put it on billboards, and tap it out in Morse code. But he might have bitten off more than he can chew this time. Tax incidence theory does indeed suggest that taxes on corporations are partly passed through to consumers, but Republicans have never had any notable success convincing Joe Sixpack of this, despite almost endless efforts to do so.

    Still, forewarned is forearmed. At least we know which particular brand of sophistry is likely to sweep like a firestorm through Fox/Rush/Drudge land over the next few days. Keep your eyes peeled.

  • I Am Open Minded. Hooray!


    Recent research suggests that web users are pretty catholic in their news reading habits. Conservatives read liberal sites and liberals read conservative sites.  Slate wants to check this theory out, so they produced an applet that tells you just how isolated you are, news-wise:

    Here’s how it works: When you click on the “Profile Me” button, we will check which news sites you’ve visited recently. Then, using the same Web site rankings Gentzkow and Shapiro used in their research, we’ll tell you how “isolated” you are….We do not save the information, just your overall score, which will be used solely to compare you to other Web surfers and possibly, if enough of you try it out, other Slate readers.

    My score is on the right: I clock in at +14, which means I visit more conservative sites than liberal ones. What an open-minded fellow I am!

    Except for one thing: the vast majority of my reading is done via RSS — and most of it is liberal blogs. What’s more, when I head off to Drudge or Michelle Malkin, it’s mostly in hopes of finding something I can mock, not because I’m really interested in what they have to say.

    Still, Slate says I’m officially open minded. Hooray for me!

  • Cap-and-Trade in California


    When I turn on my TV these days, I’m usually assaulted by ads from the two candidates trying to win the Republican primary for governor of California this year. Both of them are Silicon Valley moderates who are desperately trying to convince the GOP faithful that they’re actually stone cold reactionaries, and the ads have gotten pretty ugly. And not just toward each other. One ad that’s currently in heavy rotation, after spending its first 25 seconds trashing the opposing candidate, ends with this ominous message: “After Arnold, don’t we deserve….a Republican?”

    Ouch. Why are California Republicans hating on Arnold Schwarzenegger? The bill of particulars against the Governator is long, but a big part of the answer is AB32, a global warming bill passed by the Democratic legislature and signed into law by Schwarzenegger in 2006. “I say the debate is over,” he had declared a year earlier, and needless to say, those are fighting words for modern conservatives.

    But what makes it worse — much, much worse — is what AB32 does. This is not your run-of-the-mill conservation or energy efficiency bill. That would be bad enough. But the centerpiece of AB32 is a plan to limit California’s greenhouse gas emissions, and the primary way it does this is by authorizing the California Air Resources Board to implement a cap-and-trade plan designed to reduce CO2 emissions to 1990 levels by the year 2020. It’s the same kind of cap-and-trade proposal that President Obama and congressional Democrats want to impose on the entire country.

    Now, this would hardly be the first cap-and-trade plan in history. That honor belongs to the effort to limit acid rain in the early 90s, which employed a cap-and-trade mechanism that was — surprise! — originally a conservative idea designed to make use of market principles to reduce sulfur pollution. Nor would it be the first CO2 cap-and trade plan. Europe is already in phase two of ETS, their continent-wide cap-and-trade program. In fact, it wouldn’t even be the first CO2 cap-and-trade plan in the United States. RGGI, a cap-and-trade mechanism for ten northeastern states, started up two years ago and auctions off CO2 permits every three months. You can see the results online if you’re interested. (In the most recent auction, a permit to emit a ton of CO2 sold for about two bucks.)

    But none of that matters. California is still California, a bellwether for the nation, and cap-and-trade here would give the idea both exposure and legitimacy that neither RGGI nor far-off Europe ever could. And so the opposition has gotten hot. AB32 set out a 6-year implementation schedule, which means that cap-and-trade is still a couple of years off. To keep that from happening, an ugly confederation of oil companies and conservative activists has banded together to put an initiative on the November ballot that would temporarily suspend AB32 until the economy improves. How long is “temporarily”? Until unemployment is down to 5.5% for four quarters in a row. And how long would that take? State estimates suggest that California’s unemployment rate won’t drop to that level until 2017, which means the earliest AB32 could go into effect is 2018. But what are the odds that California won’t suffer any kind of economic downturn in the next eight years? Pretty slim. The reality is that the proposed initiative would almost certainly kill off AB32 for good.

    So what are the chances of repeal succeeding? Hard to say. The anti-AB32 movement is called the California Jobs Initiative, and their argument is that AB32 will cost California over a million jobs, something the state can hardly afford in the middle of a brutal recession. AB32’s supporters dismiss CJI’s numbers as ridiculous, and the ammunition employed by the two sides, as usual, is dueling reports. A study from Charles River Associates suggests that AB32 would reduce average household income in California by about 1%. A study from the Air Resources Board, by contrast, projects that both household income and the number of jobs in California would rise slightly by 2020. The Legislative Analyst’s Office, generally considered an honest broker, suggests that California might suffer small near-term job losses if AB32 is implemented, but their analysis is pretty shallow and speculative and their conclusions were backed up with virtually no evidence at all. Energy efficiency, on net, is usually a winner, something that a wide variety of studies has confirmed.

    But all three studies agree on two things: (a) the economic effects of AB32, whether positive or negative, are likely to be modest, and (b) there’s a ton of uncertainty in the forecasts. The best bet is to simply admit that the most likely economic effect of AB32 is either zero or not far from it. The econometric tools at hand just don’t allow us to say much more.

    But that might not be enough to save AB32. A recent Field Poll showed that 58% of Californians favor the law, but that’s a pretty thin majority. A barrage of industry-funded ads will probably eat into that majority, and turnout at the November election is likely to skew conservative. Add in California’s 12.5% unemployment rate and you have a recipe for a pretty effective fearmongering marketing campaign.

    But even if the repeal movement fails, AB32 could still be in trouble if a Republican wins the governor’s race. Jerry Brown, the only serious candidate on the Democratic side, supports AB32, but both of the Republican candidates oppose it. And since the legislation allows the governor to suspend the law for a year in the event that it poses a threat of “significant economic harm,” a Republican governor could effectively kill it for good by simply suspending it every year for as long as they’re in office.

    This makes AB32’s future hazy to say the least. Supporters need to fight off a well-funded initiative campaign and make sure a Democrat is California’s next governor. And they need to do it in an electoral environment that promises to be heavily favorable to the GOP and to anti-government forces in general. Four years ago AB32 promised to be the most muscular climate bill in the country. But unless a bunch of things go its way, by next year it might be dead.

  • Oil Spill Goes From Bad to Worse


    I haven’t verified these numbers myself, but the friend who sent them to me is a trustworthy sort. Experts now estimate that five times more oil has been spilling into the water from that oil rig explosion off the coast of Louisiana than they thought before:

    Okay. Here’s how much they estimated was leaking before this evening: 42,000 gallons a day.

    Five times that amount means approximately 210,000 gallons a day have been leaking into the Gulf.

    If this spill continues unabated for two months — and that seems to be the most likely time frame at this point — we’re talking about 12.6 million gallons.

    Exxon Valdez? That was 10.8 million.

    Enjoy your evening.

    But even that might be low. SkyTruth.org estimates that the spill rate is 20 times higher than initial estimates and that 6 million gallons of oil have already spilled into the Gulf. An Exxon Valdez size spill might only be a few days away.

  • Greece Plumbs the Depths


    You have to hand it to the LA Times for somehow dredging up a local angle to the Greek debt crisis:

    Earlier on, with public protests against austerity plans escalating, the Athens government placed a $250,000 order for the body shields that Temecula-based Paulson Manufacturing Corp. makes for riot police and others.

    Now, the order has been placed on hold. “We’re waiting,” the Athens government said in a short message to the company’s international staff. “Their money problems in Greece are dramatically affecting us,” said company President Roy Paulson.

    Jeebus. The Greeks are so broke they can’t even afford the protective gear they need to put down the riots caused by the country being broke. If the Germans bail them out, will they insist that the Greek government buy German riot equipment instead?

  • Chutzpah Watch: Financial Regulation Edition


    I’ve been noticing a new conservative meme lately. Basically, it’s this: the government failed to stop the housing bubble, so it’s folly to suggest that more government will stop any future bubble.

    I don’t really have anything to say about this. I’m just sort of bemused by the audacity of spending 30 years deregulating everything in sight, watching the financial system implode, and then blaming it all on weak-kneed bureaucrats. It’s hard not to admire the chutzpah.

  • Better Coverups, Please


    China’s women’s gymnastics team in the 2000 Olympics has been stripped of its bronze medal after an investigation revealed that Dong Fangxiao was 14 years old at the time, not 16 as international rules require. How did our intrepid investigators figure this out? Like so:

    Dong worked as a national technical official for the Beijing Olympics. Her accreditation information listed her birthday as Jan. 23, 1986, which would have made her 14 in Sydney. Also, Dong’s blog said she was born in the Year of the Ox in the Chinese zodiac (Feb. 20, 1985, to Feb. 8, 1986).

    Obviously China’s athletic authorities are accustomed to pretty lackadaisical standards in the cover-up arena. Subtlety and thoroughness probably aren’t especially urgent in authoritarian states, after all. But if they’re going to compete with the West, they need to lift their game. Better coverups, please.

  • Obama and the Media


    If there’s anything that reporters can write about at great length, it’s themselves. Over at Politico, Josh Gerstein and Patrick Gavin prove that today with a 4,000 word opus about how poorly the Obama White House treats the press corps.

    It’s actually interesting reading in a gossipy sort of way. I’ll just say this, though: I don’t think this is an Obama issue, and I don’t think it’s a Republican vs. Democrat issue. I think it’s just one of those things that gets continually worse over time. Nixon ran a tighter press shop than LBJ, Reagan ran a tighter one still (or, perhaps, a more sophisticated one), Clinton took it another step, and then Bush yet another. In the same way that (mostly) Republicans have discovered that a lot of legislative rules are actually just traditions that can be revoked whenever it’s convenient, the White House over the years has discovered that it can put a tighter and tigher leash on the press and control its message better without paying any real price. I expect this process to continue regardless of who’s in the Oval Office. It’s just a reflection of the changing media environment.